Cisco earnings disappoint

Cisco Systems
, the world’s largest maker of computer-networking equipment, said its net income fell 18 percent in the latest quarter, and it provided a disappointing forecast for the current quarter.

Cisco’s stock plummeted in after-hours trading, replaying its movement after the company reported its earnings for the previous quarter. The shares were down $2.14, or 9.7 per cent, to $19.89.

Cisco said it earned $US1.5 billion, or 27¢ per share, in its fiscal second quarter, which ended January 29. That compares with $1.9 billion, or 32¢ a share, in the same quarter a year ago.

Excluding items and the cost of stock-based compensation, Cisco earned 37¢, 2¢ more than the average forecast of analysts polled by FactSet.

Revenue at the San Jose-based company was $10.4 billion, up 6 per cent from $9.8 billion a year ago. Analysts were expecting $10.3 billion.

The company warned late last year that sales to government customers were dropping off. Cisco CEO John Chambers said he expected that trend to continue. In addition, the company saw sales of one of its core products, network switches, decline by 7 per cent in the previous year. Mr Chambers blamed this on a “product transition", as Cisco is moving new models into the market.

Cisco said it expected earnings, excluding items, of 35¢ to 38¢ a share in the current quarter, which ends in April. Analysts were expecting 40¢ a share.

Mr Chambers said he expected revenue for the current quarter to rise 4 per cent to 6 per cent from a year ago, a far cry from last summer, when revenue was rising 27 per cent from the doldrums of the recession. It’s also lower than Cisco’s oft-stated long-term growth target of 12 per cent to 17 per cent.